The New Zealand Government has denied accusations by vice-chancellors that it is bent on asserting "creeping state control" over universities.
Tensions have been high after The Herald newspaper ran a story claiming that the Government intended to create a minister responsible for tertiary institutions. The report said the minister would be able to conduct inquiries into universities' academic affairs and dismiss university council members for "just cause".
The paper also claimed that universities would need approval from the Treasury to borrow money in the future.
Trevor Mallard, Minister for State Services, responded: "I have not seen and I have not considered any such proposals."
Universities are still worried by another potentially dramatic change to their status mooted by the Government. Ministers want to turn all tertiary education institutions into Crown Entities - "organisations in which the State has a controlling interest", according to legislation.
While the requirements placed on universities would remain largely unchanged, the State Services Commissioner - New Zealand's most senior public servant - would be able to obtain information from institutions to carry out reviews. These reviews could investigate universities' functions, and the desirability of amalgamating, creating or abolishing institutions.
Mr Mallard said the Bill was intended to ensure that institutions were accountable for the public money they received. "We are talking about the proper spending of public funds, not increased state control. All governments are interested in accountability for public - that is, taxpayer - funding," he said.
Stuart McCutcheon, chairman of the Vice-chancellors' Committee, said government assertions of what he termed an "ownership interest" in universities were especially galling when government funding accounted for just 40 per cent of their income.
It appears to be the language of ownership and control, rather than the provisions of this legislation, that most worry university leaders. The Financial Reporting Standards Board, responsible for developing and maintaining financial reporting standards in New Zealand, is considering whether universities' financial statements should be consolidated into the Government's statements on a "line-by-line" basis.
The key test will be who has financial control. Vice-chancellors say that consolidation of university accounts is something no other comparable country does.
Universities point to the Education Act, which requires government ministers to preserve and enhance institutional autonomy, but so far they have found little sympathy.
"Good governance and financial reporting should enhance our university system's international reputation, not the reverse," Mr Mallard said.